Commodities

Crude oil continues to remain range-bound

Akhil Nallamuthu | Updated on September 03, 2019 Published on September 03, 2019

File photo   -  Reuters

BL Research Bureau

MCX-Crude (Rs 3,967)

September futures contract of crude oil in Multi Commodity Exchange (MCX) has been trading in a range between Rs 3,845 and Rs 4,075 over the past two weeks. The contract failed to move past a hurdle at Rs 4,075, thrice, within the past month, making this resistance level very crucial. On Friday, the contract made an intraday high of Rs 4,074 before falling to a low of Rs 3,921 and closing the day at Rs 3,967. As long as the contract trades below the resistance at Rs 4,075, long term trend will remain bearish. Nearest support for the contract is at the 20-day moving average of at Rs 3,925.

On the other hand, the broad negative sentiment for crude oil is diminishing of late, and if the contract breaks above the upper boundary of the consolidation range (Rs 4,075), it can encounter a hurdle at Rs 4,195. If the momentum sustains, and the contract breaches Rs 4,195, it can rally towards Rs 4,300 levels quickly. Alternatively, if the price declines and breaks below the lower boundary of the consolidation range (Rs 3,845), the sell-off could intensify and drag the contract to Rs 3,690 and even lower to Rs 3,625 over the medium term.

In the current scenario, traders should tread with caution and can wait until the contract breaks out of the consolidation range.

Published on September 03, 2019
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